Vineyard Industries Has Three Product Lines, A, B, and C

question 34

Multiple Choice

Vineyard Industries has three product lines, A, B, and C.The following information is available: $\begin{array}{lrrr}&A&B&C\\\text { Sales } & \$ 60,000 & \$ 90,000 & \$ 24,000 \\\text { Variable costs } & \underline{36,000} & \underline{48,000} & \underline{20,000} \\\text { Contribution margin } & \$ 24,000 & \$ 42,000 & \$ 4,000 \\\text { Fixed costs: } & & &\\\text { Avoidable } & 9,000 & 18,000 & 3,000 \\\text { Unavoidable } & \underline{6,000} & 9,000 & 2,400 \\\text { Operating income } & \$ 9,000 & \$ 15,000 & \$ 1,400) \end{array}$ Assuming Vineyard Industries can increase the selling price of product C to $30,000, all other information remaining constant, operating income will _____.

• A)increase $3,600
• B)decrease $3,600
• C)decrease $6,000
• D)increase $6,000

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Definitions:

Contracts

Legally enforceable agreements between two or more parties that create mutual obligations.

Assignee

The party to whom rights or properties are transferred in an agreement or by legal means.

Obligor

An obligor is an individual or entity legally obliged to provide a benefit or payment to another under the terms of a contract.

Assignment

The transfer of rights, property, or obligations from one party to another, often seen in contractual and legal contexts.